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Wednesday, July 24, 2013

2.Measures to assess external stability“external stability” means a situation in which Australian economy is able to fulfill its international commitments.

3.Balance of PaymentsBalance of payments (Bop) accounts are an accounting record of all monetary transactions between a country and the rest of the world.These transactions include payments for the country's exports and imports of goods,services,financial capital and transfers.The Bop accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency,

4.Balance of payments

5.Balance of payments(NFD)

6.1.Current A/c DeficitPart of balance of payments.Australia has been facing deficit as imports>exportsAnother important reason being the high level of interest paid towards NFD.Elements of Balance of current A/cCredits-Debits+NFD=balance of current A/c

7.Net Foreign DebtsWhat is gross and net foreign debt?Net Foreign Debt o/s=Payments-ReceiptsExpressed as % of GDP or just as a raw figure.Financial institutions have a huge role to play in creation of foreign debts.NFD of Australia seems to grow every year-Low saving rateHigh investmentDependence on global markets.

8.Difference in saving and investment

9.NFD as % of GDP

10.Exchange RatesExchange rates are needed in order to have trade between different countries-receipt and paymentsExchange rates are fixed based on the market share the particular economy is holding in global trade.It is the value of Australian dollar expressed as another currency.For e.g.- 1 AUD$=0.983 US$ 1 AUD$=Rs.53.45Usually converted to US dollarTraded Weighted Index also assess movements of the currencyFloatation of AUD in 1983-Dirty FloatAppreciation and Depreciation